World Bank improves Russia’s 2016 GDP outlook to 0.6% contraction

MOSCOW, Nov 9 (PRIME) -- The World Bank (WB) has improved its 2016 outlook for Russia’s gross domestic product (GDP) to a 0.6% decline from 1.2%, it said in a report published on Wednesday.

“In 2016, the economy is projected to contract by 0.6%, and grow by 1.5% in 2017 and 1.7% in 2018, as hydrocarbon prices are forecast to continue recovering and positively affect domestic demand,” the World Bank said.

The previous 2017 GDP forecast stood at 1.4%.

The estimate is based on a U.S. $55.2 per barrel oil price on average in 2017 and a $59.9 one in 2018.

The bank said that this upsurge in economic growth will be unfavorable for diversification. The natural resource price volatility and structural limits will remain a threat to the Russian economy.

Russia’s imports replacement policies have not affected economic growth and production factor redistribution significantly.

Russia’s budget deficit is forecasted at 4.2% of the GDP in 2016, 2.2% in 2017 and 0.6% in 2018, suppressed by spending reduction.

Inflation will amount to below 6% in 2016 and will reach the target of the Russian central bank of 4% in 2017. As a result, consumption will rise 2% in 2017 and 1.6% in 2018.

The poverty level, which is expected to be 13% in 2016, will fall to 12.2% in 2017 and 11.8% in 2018.

Chief Economist of WB Apurva Sanghi said at a press conference after the report release that Russia will be unable to escape the retirement age increase.

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